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7 Surprising 1-Star Stocks

These low-rated picks show that a stock doesn't have to be loved to outperform.

Part of being a successful investor is being able to think independently and having a strong enough conviction to stick with your ideas. This can be a difficult enough task when you're looking at a stock that the media and analysts generally like -- after all, in the stock market, there's a seller for every buyer -- but it becomes a far thornier proposition when you're looking at a stock that can't seem to find good press or bullish investors anywhere.

Of course, going against popular opinion has led to great returns for many contrarian investors.

In that spirit, I've headed to the Motley Fool CAPS community to dig up some unloved stocks that have delivered big gains to shareholders over the past month. Our community of investors had given each of these companies a one-star rating -- the lowest possible -- just 30 days ago:

Now I'm not recommending that you run out and buy these stocks! Their low ratings are a big, flashing red light. CAPS players have been pretty adept at picking out good stocks, and even better at pointing out bad stocks to avoid. In fact, an index set up to short the least-liked stocks in CAPS has outperformed more than 99% of all other CAPS players.

In other words, most stocks that are rated with one star in CAPS are likely to underperform. However, CAPS players aren't perfect. They've been overly negative on stocks such as Crocs and DryShips, both of which have delivered seriously impressive returns. So the question is whether any of the stocks in that table might be one of those undercover rockets.

Do research? You're kidding!
That's right, the best way to figure out whether any of these stocks is worth considering for your portfolio (real or CAPS) is to roll up those sleeves and dig in. What we're looking for are stocks that have good fundamentals despite the lack of popularity: a profitable business, good management, and some decent growth prospects.

Now which of these would I take a pass on? As exciting and potentially rewarding as alternative energy may be, stocks like FuelCell and Hoku are still too speculative for my taste. As I've mentioned before, I'm still not digging the homebuilder stocks, so D.R. Horton is a no-go as well.

But how about good old Sony? The past few years have been a mixed bag for Sony and that's been reflected in its stock price. Coming into 2007, the stock was lower than where it was in the beginning of 2002, though during the interim period it was both higher and much lower. More recently, though, while sales of PlayStation3 haven't blown anyone away, they've been respectable. In addition, turnaround efforts may soon be starting to bear fruit. Year to date, Sony's stock is up more than 30%.

Players on CAPS are also starting to warm up to Sony a bit. Though the stock still sports a pretty lousy rating, it has been bumped from one star to two. A recent outperform rating came from CAPS All-Star schrinjm, who emphasized the potential for PS3 sales to continue to heat up and help drive the company.

So what's your take on Sony? Head over to CAPS and let the community of more than 77,000 Fools know what you think. While you're there you can start your research on any of the other stocks listed above or any of the 5,300 stocks rated on CAPS.

Fool contributor Matt Koppenheffer didn't see these particular moves coming, but he's rarely surprised at Mr. Market's general tomfoolery. You can check out Matt's CAPS portfolio here, or visit his blog. He does not own shares of any of the companies mentioned. The Fool's disclosure policy is never going to give you up, it's never going to let you down, and it's definitely never going to run around and desert you.